Energy crisis

This article is about energy crises in general. For other uses, see Oil crisis.

This article is outdated. Please update this article to reflect recent events or newly available information.(January 2010)

An energy crisis is any great bottleneck (or price rise) in the supply of energy resources to an economy. In popular literature though, it often refers to one of the energy sources used at a certain time and place, particularly those that supply national electricity grids or serve as fuel for vehicles. There has been an enormous increase in the global demand for energy in recent years as a result of industrial development and population growth. Since the early 2000s the demand for energy, especially from liquid fuels, and limits on the rate of fuel production has created such a bottleneck leading to the current energy crisis.

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The gasoline shortages of World War II brought a resurgence of horse-and-wagon delivery.

Government actions like tax hikes, nationalisation of energy companies and regulation of the energy sector shift supply and demand of energy away from its economic equilibrium. Market failure is possible when monopoly manipulation of markets occurs. A crisis can develop due to industrial actions like union organized strikes and government embargoes. The cause may be over-consumption, aging infrastructure, choke point disruption or bottlenecks at oil refineries and port facilities that restrict fuel supply. An emergency may emerge during very cold winters due to increased consumption of energy.

Large fluctuations and manipulations in future derivatives can have a substantial impact on price. Large investment banks control 80% of oil derivatives as of May 2012, compared to 30% only a decade ago.[1] This increase contributed to an improvement of global energy output from 117 687 TWh in 2000 to 143 851TWh in 2008.[2] Limitations on free trade of derivatives could reverse this trend of growth in energy production. Kuwaiti Oil Minister Hani Hussein stated that "Under the supply and demand theory, oil prices today are not justified," in an interview with Upstream.[3]

Pipeline failures and other accidents may cause minor interruptions to energy supplies. A crisis could possibly emerge after infrastructure damage from severe weather. Attacks by terrorists or militia on important infrastructure are a possible problem for energy consumers, with a successful strike on a Middle East facility potentially causing global shortages. Political events, for example, when governments change due to regime change, monarchy collapse, military occupation, and coup may disrupt oil and gas production and create shortages. Fuel shortage can also be due to the excess and useless use of the fuels.

2000s energy crisis - Since 2003, a rise in prices caused by continued global increases in petroleum demand coupled with production stagnation, the falling value of the U.S. dollar, and a myriad of other secondary causes.

2008 Central Asia energy crisis, caused by abnormally cold temperatures and low water levels in an area dependent on hydroelectric power. At the same time the South African President was appeasing fears of a prolonged electricity crisis in South Africa."Mbeki in pledge on energy crisis". Financial Times. Retrieved 2008-02-10.

In February 2008 the President of Pakistan announced plans to tackle energy shortages that were reaching crisis stage, despite having significant hydrocarbon reserves,.[4] In April 2010, the Pakistani government announced the Pakistan national energy policy, which extended the official weekend and banned neon lights in response to a growing electricity shortage.[5]

China experienced severe energy shortages towards the end of 2005 and again in early 2008. During the latter crisis they suffered severe damage to power networks along with diesel and coal shortages.[7] Supplies of electricity in Guangdong province, the manufacturing hub of China, are predicted to fall short by an estimated 10 GW.[8] In 2011 China was forecast to have a second quarter electrical power deficit of 44.85 - 49.85 GW.[9]

The Economist predicted that in the years after 2009 the United Kingdom will suffer an energy crisis due to its commitments to reduce coal-fired power stations, its politicians' unwillingness to set up new nuclear power stations to replace those that will be de-commissioned, and unreliable sources and sources that are running out of oil and gas. It is therefore predicted that the UK may have regular blackouts like South Africa.[10]

“Peak oil” is the period when the maximum rate of global petroleumextraction is reached, after which the rate of production enters terminal decline. It relates to a long-term decline in the available supply of petroleum. This, combined with increasing demand, significantly increases the worldwide prices of petroleum derived products. Most significant is the availability and price of liquid fuel for transportation.[11]

The US Department of Energy in the Hirsch report indicates that “The problems associated with world oil production peaking will not be temporary, and past 'energy crisis' experience will provide relatively little guidance.”[12]

To avoid the serious social and economic implications a global decline in oil production could entail, the 2005 Hirsch report emphasized the need to find alternatives, at least ten to twenty years before the peak, and to phase out the use of petroleum over that time. This was similar to a plan proposed for Sweden that same year. Such mitigation could include energy conservation, fuel substitution, and the use of unconventional oil. Because mitigation can reduce the use of traditional petroleum sources, it can also affect the timing of peak oil and the shape of the Hubbert curve.

To avoid a serious energy crisis in coming decades, citizens in the industrial countries should actually be urging their governments to come to international agreement on a persistent, orderly, predictable, and steepening series of oil and natural gas price hikes over the next two decades.

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Due to a lack of political viability on the issue, government mandated fuel prices hikes are unlikely and the unresolved dilemma of fossil fuel dependence is becoming a wicked problem. A global soft energy path seems improbable, due to the rebound effect. Conclusions that the world is heading towards an unprecedented large and potentially devastating global energy crisis due to a decline in the availability of cheap oil lead to calls for a decreasing dependency on fossil fuel.

Other ideas concentrate on design and development of improved, energy-efficient urban infrastructure in developing nations.Vittorio E. Pareto, Marcos P. Pareto. "The Urban Component of the Energy Crisis"(PDF). Retrieved 2008-08-13. Government funding for alternative energy is more likely to increase during an energy crisis, so too are incentives for oil exploration. For example, funding for research into inertial confinement fusion technology increased during the 1970s.

The macroeconomic implications of a supply shock-induced energy crisis are large, because energy is the resource used to exploit all other resources. When energy markets fail, an energy shortage develops. Electricity consumers may experience intentionally engineered rolling blackouts during periods of insufficient supply or unexpected power outages, regardless of the cause.

Industrialized nations are dependent on oil, and efforts to restrict the supply of oil would have an adverse effect on the economies of oil producers. For the consumer, the price of natural gas, gasoline (petrol) and diesel for cars and other vehicles rises. An early response from stakeholders is the call for reports, investigations and commissions into the price of fuels. There are also movements towards the development of more sustainable urban infrastructure.

In the worst kind of energy crisis energy rationing and fuel rationing may be incurred. Panic buying may beset outlets as awareness of shortages spread. Facilities close down to save on heating oil; and factories cut production and lay off workers. The risk of stagflation increases.

Frontlines: Fuel of War, a first-person shooter game that depicts a global energy crisis in 2024 leading to war between Western Coalition (EU and USA) against Red Star Alliance (Russia and China) over the last remaining natural resources